It's a bit of a paradox. The purpose of screening isn't really to confiscate dangerous materials, but to prevent people from ever bringing it. If you have a ban on liquids, then an attacker isn't going to bother bringing a liquid bomb. All liquids you encounter will be benign. Yet that doesn't mean that the ban is useless: if someone wants to bring a liquid bomb, then if you remove the liquid ban they will bring it.
I think the liquid ban is pretty silly, but that's because the whole idea of a liquid bomb seems to be unworkable, and there are better ways to handle this stuff. The fact that confiscated liquids are handled so casually is not actually an argument against the ban.